Moody's in new ratings warning

04 February 2011 03:00 PM

RATINGS agency Moody's has warned that bank ratings would be affected if the next Government pushes through its proposals on "burden sharing" for senior bondholders.

The agency said that any cut similar to that applied to subordinated debtholders in some banks, would be considered to be "a form of default". Moody's warned in a note that if the new banking strategy was "materially different" to the current Government, they would automatically re-examine the ratings.

"An important element in this will be the new Government's attitude towards senior creditors of the domestic banks," said Ross Abercromby, a Moody's senior analyst and vice-president.

Both Fine Gael and Labour, likely to be the constituent parties in the next Government, have signalled a desire to share the costs of bailing out the banks with bondholders. The agency has noted that "leading politicians have made statements suggesting that senior debt bondholders might need to contribute to the cost of supporting the banking system".